A Date and Time for “Financial Armageddon?”

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Pete H. — a reader — gives us a good, round piece of his mind:

I have read your emails and joined some of your services over the last 10 or more years.

I have put up with your ramblings about the financial world coming to an end pretty much over that same time.

Here is a fact. Nothing has happened since and though no doubt it will one of these decades, if people had listened to you, they would have buried their money with zero return, unlike the markets, which continue to go up. Who cares how or whether it’s wrong or right? It still is going up.

After a while — I mean a long, long while — your dire warnings fall on deaf ears. So unless you can provide a date and time for financial Armageddon, I will continue to reap rewards from fools, be they the Fed, federal government or the debt-ridden world.

We can spare Mr. H. needless suspense. We never can give out the information he seeks: “a date and time for financial Armageddon.”

Nor — for the matter of that — can anybody else, the claims of false prophets notwithstanding.

“You will know neither the day nor the hour”… as the Good Book reads.

Not even the Son of God Himself knows — by His own admission.

But the reader’s tort against us contains justice — by our own admission.

Crying Wolf

Day upon day, year upon year, we moan about the (increasingly) debt-ridden world. We holler against the Federal Reserve…

We shout about an approaching stock market collapse… as the fabled boy shouted about an approaching wolf.

How many phantom wolf sightings can a fellow endure? He eventually turns a deaf ear… as our reader has turned a deaf ear to us.

“Who cares how or whether it’s wrong or right,” he razzes us. “It still is going up.”

We cannot deny it. The market is still going up — despite our impeccable reasoning, despite all the angels of hell.

We certainly credit the Federal Reserve for the market’s recent spree. It has expanded its balance sheet obscenely since September. Let us briefly reintroduce the evidence:


And Exhibit B:


Finally, Exhibit C gives the result:


A Just Stock Market

But let the record reflect:

We have never denied the manipulated stock market can be lucrative. Nor would we deny that bank robbing can be lucrative. Or that counterfeiting can be lucrative.

We have only questioned its authenticity… and its justice.

The stock market should be a scene of free and open combat. Bull and bear, bovine and ursine, let them meet on fair and neutral ground.

There they can settle their quarrels under honest competition.

A scrupulously impartial judge should referee the bout. His lone concern should be the equal application of martial justice.

He must hold the scales even.

And may the winner emerge fair and square, his hand raised in honest victory.

Should it be the people’s champion, the bull, so much the better.

But should the unpopular bear walk out victorious, well then…. the unpopular bear walks out victorious.

The bear would win because he was the stronger fighter. The bull would lose because he was not.

Justice, that is… would be done.

Now enter injustice…

The Fed Rigs the Fight

The Federal Reserve is not a neutral referee in this bout. It is rather an active participant, in active conspiracy with the bull.

How does it influence the outcome?

Before the bout it packs the bull’s gloves with iron. And once the action commences…

If the bull strikes beneath the belt, if he bites in the clinches, if he punches after the bell has rung…

This rogue referee instantly loses his powers of vision. He sees nothing.

And if the bear smites the bull down to the canvas, witless, leaving him to take the count?

Then this corrupto stretches the count until the sprawling bovine can regain the vertical… and his wits:

“O-o-o-o-o-o-n-e… … … … t-w-o-o-o-o-o-o… … … … t-h-h-h-r-e-e-e-e-e-e… … … … ” all the long way to 10.

Meantime, should the bear absorb but a glancing blow, the official declares him loser by technical knockout, the victim of a mighty clout.

What we have then, is not a contest of one against one. We have instead a travesty of two against one.

The badly used bear is denied all chance of victory.

“Fīat Jūstitia Ruat Cælum”

Yes, the crowd roars its approval. Even our reader, though recognizing the wrong, applauds reluctantly this holocaust of justice.

He does — after all — have a wager on the outcome.

But we confess it. Our sympathies go the other way…

There exists a force deep down, within the liver and lights, that wants it square — that demands honest justice.

And so a fellow leans naturally in an underdog’s direction… and away from the lawless overdogs.

In this instance, he leans toward the underdog bear.

“Fīat jūstitia ruat cælum” is the cry on our lips — “Let justice be done though the heavens fall.”

One day they may. But how much more injustice must the bear endure?

Give him his chance, we say. Else we will never know the rightful winner.

Meantime, we must file a scorching caveat against one of our reader’s claims…

Bury Your Money With “Zero Return?”

Had people taken aboard our advice, says our reader, “they would have buried their money with zero return, unlike the markets, which continue to go up.”

But we have never suggested anyone bury his money… or his head.

Each issue of The Daily Reckoning links to insightful financial research. It serves one purpose: to show you how to profit from today’s markets, rigged or not rigged.

A portion of it — by some miracle of God — somehow succeeds.

Yes, it is true we have recommended gold. Gold offers zero yield — and even lesser thrill.

But if you sank your money in gold instead of stocks… have you really buried it?

Daily Reckoning co-founder Bill Bonner prefers to view the stock market through a golden prism.

The stock market is denominated in dollars. But today’s dollar — relative to the pre-1971 gold-backed dollar — is a wasting asset, a sawdust asset.

Use gold as your yardstick then. You will discover the market’s nominal dollar gains pack far less wallop than commonly supposed.

“The Stock Market Is Worth Less Than Half of What It Was Worth 20 Years Ago”

Mr. Bonner:

In terms of real money — gold-linked, pre-1971 dollars— stocks have been losing ground since the start of the millennium…

The whole bull market — 2009–2019 — for example, was false… phony… a fake-out by central banks.

Yes, stock prices rose impressively in dollar terms. But in real-money terms — gold — the bull market of the last 10 years looks like an average bear market bounce.

In gold terms, the Dow merely retraced half of its losses. You could buy the Dow with 40 ounces of gold in January 2000. By January 2011, the Dow 30 stocks would cost you only 8 ounces.

In other words, stock investors had lost 80% of their money. Then in the following run-up — fueled by extravagant and nutty efforts to inflate asset prices — the Dow-to-gold ratio rose to 22. At that point, stock market investors had recovered about half of what they lost — a classic bear market bounce…

And right now, [gold is] telling us that the stock market is worth less than half of what it was worth 20 years ago.

In gold terms… the stock market is worth less than half of what it was worth 20 years ago?

Could it be?

Thus any money “buried” in gold has been up and doing, busy, putting in hard service.

Meantime, the stock market merely scrambles to recover lost ground.

Will it finally reclaim it all? Alas, no.

“Financial Armageddon” closes in on the stock market. When can you expect it?

Tomorrow we reveal the precise date, hour and second — guaranteed.


Brian Maher
Managing editor, The Daily Reckoning

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What Will You Save When You Cut the Cord?

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Dear Rich Lifer,

The so-called Golden Age of Television started back in the 1950s when TV sets began their explosive growth.

You might remember shows like I Love Lucy, Toast of the Town with host Ed Sullivan, and Gunsmoke.

These classics paved the way for networks to start adding even more content.

In the ‘60s, TV networks started showing full-length movies that had played in theatres. As the supply of movies started to dwindle the networks started producing their own “made-for-TV” movies.

Today, we’re going through another Golden Age of Television. Networks are investing billions of dollars into content creation.

Even large corporations like Amazon have their own movie and TV studios pumping out award-winning hits.

But with so much great TV comes ever increasing, expensive cable bills.

The Wall Street Journal recently cited data from Kagan, S&P Global Market Intelligence noting that the average cable customer pays more than $90 a month plus another $57 a month for high-speed internet.

Compare that to monthly streaming services from Amazon, Netflix and Hulu that tend to run between $9 a month up to $45 a month plus internet. It’s a no brainer.

You can even stream live TV and sports now for less than you pay for cable, plus there’s no commitment. Most services can be cancelled with the push of a button and you’re never tied to any lengthy contracts.

If you’re fed up with soaring cable bills and ridiculous monthly charges, it’s time to take the plunge and cut the cord.

Before I show you how easy it is to ditch your cable company, let’s cover some of the pros and cons first:

Pros of Cutting the Cord

  • The #1 pro is cost savings. You’ll typically save anywhere from $40 to $50 or more per month when you decide to cut the cord. Just think about all the things you could do with an extra $600…
  • Most live streaming services give you access to a free Cloud DVR (no more physical DVR box). This makes “taping” your favorite shows really convenient, which brings us to our last pro…
  • Most streaming services work on any device (laptop, tablet, smartphone, Kindle etc.) connected to the internet, which means you can watch TV anywhere. This is great for anyone who travels a lot, or has multiple residences throughout the year.

Cons of Cutting the Cord

  • Channel flipping can be slow. If you enjoy flipping through channels, you might not get that same satisfaction with streaming live TV or movies. It takes a few steps to change from one platform like Hulu Live to Netflix, Amazon and other streaming services. So if the ability to channel surf is worth an extra $50 a month, then hang 10, dude.
  • You’ll need a device like Roku or the Amazon Fire TV Stick to get streaming services. Unless you have a smart TV, you’ll need to buy a device that plugs into your TV and allows you to stream. The good news is these are cheap ($40-$50 one-time payment).
  • Some live TV streaming services have commercials you can’t fast forward. Hulu Live has a commercial option or commercial-free paid subscription. The commercial option will politely tell you how long ad breaks will last, so you can run to the bathroom or kitchen.

How to Cut the Cord in 5 Easy Steps

If you’re ready to cut the cord, here’s what you do:

  1. Decide if an antenna might work for live TV channels. You can dramatically cut costs by getting an antenna to tune into major broadcast stations like ABC, CBS and NBC as well as PBS. Antennas Direct’s ClearStream Eclipse and Antop’s Paper Thin Smartpass (they each sell for around $35 or $54) are good options for indoor antennas. You might also want to explore mounting an outdoor antenna if you live outside the city.
  2. Choose your internet provider. You probably have internet already, just make sure your internet speed is fast enough to handle multiple devices streaming at once. A good rule of thumb is 5 mbps for every streaming TV.
  3. Pick a device to perform streaming through your TV. Like I said earlier, your main options are Roku, Amazon Fire TV Stick, Chromecast and Apple TV. The first three cost about the same ($50 range), but Apple TV 4K runs a steep $179.
  4. Choose your streaming service for live TV. If you decide the antenna won’t work for live TV or you’re not picking up the programs you want, there are other live TV options. Hulu Live, DirectTV Now, Sling, YouTube TV and PlayStationVue are the most common. They’ll run you between $15 and $45 a month.
  5. Pick your streaming subscription apps. Amazon, Netflix, HBO, Showtime, Starz, Sundance Now, AMC and others offer a wide variety of original content. They all have apps and all you have to do is sign up for a subscription.

The costs of these apps vary widely: Netflix currently charges $8.99 a month for its base streaming plan, while premium channels like HBO run around $15 a month. Most subscriptions offer free trial periods with no commitment, I suggest trying different ones to see what you like.

To Cut the Cord or Not

The biggest mistake you can make is not giving this a try.

Once you take the leap and cancel your cable subscription, you’ll wonder why it took you so long — and if you want cable again, it’s not like your cable provider won’t take you back.

You’ll find that the savings are significant and you’ll have so many more options to choose from for a fraction of what you are currently paying.

You really have nothing to lose and everything to gain here. Cord cutting is not as scary as it sounds. Especially given all the options in this new Golden Age of Television.

To a richer life,

Nilus Mattive

Nilus Mattive

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The Secret to Acing an Interview After 50

This post The Secret to Acing an Interview After 50 appeared first on Daily Reckoning.

  • The biggest stumbling blocks to older workers are…
  • Avoid putting this red flag on your resume…
  • Nothing ages someone more in an interview than…

Dear Rich Lifer,

Finding work in your 50s or 60s is no easy task, but new and somewhat surprising employment data suggests that prospects are improving, especially for older job seekers.

One big reason?

This is the tightest labor market in nearly two decades, causing employers to look beyond the sea of Millennial candidates.

At the end of July, there were nearly 7.3 million unfilled jobs, but only 6.1 million people looking for work, according to the U.S. Department of Labor.

The unemployment rate in July for Americans 55 years and over was 2.7 percent, less than the overall unemployment rate at 3.7 percent.

What’s more encouraging is the average length of unemployment for older job seekers has dropped significantly since 2012.

It’s down from roughly 50 weeks to 34 weeks for job hunters age 55 to 64 and down from about 62 weeks to 30 weeks for those 65+.

In other words, it takes about seven to eight months on average to find a job if you’re over 55.

Stumbling Blocks for Those Over 50

Something I don’t think is given enough attention today are the unique challenges the over-50 crowd faces when looking for work.

Older applicants are competing with tech-savvy Millennials who often come at a cheaper price, and although age discrimination is technically illegal, it’s still pretty hard to enforce.

A study by the Government Accountability Office found five common barriers to employment for older workers:

High salary expectations — You may need to compromise on pay as your skills might not be as up to date as they once were.

Younger bosses — It’s human nature to want to work with people who are like you. If that’s the case, you need to learn how to address this obstacle in an interview.

Out of date skills — Technology is evolving faster than ever. Whether it’s applying for a job online or actually being able to operate new software, the pace can be overwhelming.

Expensive health benefits — The older you get, the more expensive your health premiums become. Bigger companies will be less impacted by this than smaller firms.

Bias — Old habits (and ideas) die hard. Know what biases you’re up against so you can get in front.

Acing the Interview

If it’s been a while since you were actively looking for work, you’ll notice certain aspects of the application and interview process has changed.

My hope today is to give you a few pointers on how to land your next gig, whether you’re coming off a layoff or looking for part-time work as a recent retiree.

If you follow these 10 tips, your inbox should be full of offer letters in the next few months.

Tip 1: Tap Your Network

A major benefit to having been in the workforce for so many years is your network of contacts. Don’t be shy to reach out to old bosses, co-workers, even subordinates.

Let them know you’re on the job hunt. Companies like referrals and it’s a lot easier to get your foot in the door if you know someone.

Tip 2: Get on LinkedIn

A quick way to tap your network is to connect with them on LinkedIn, the popular business-oriented social platform.

If you don’t have a LinkedIn profile, create one now. LinkedIn has become the go-to site for recruiters and hiring managers.

There’s plenty of good advice online that will walk you through how to build an attractive profile that will grab the attention of headhunters.

Bonus: just having a decent LinkedIn profile shows that you’re somewhat tech-savvy helping fight the ‘tech-illiterate’ label.

Tip 3: Update your Wardrobe

This might sound superficial but you need to dress for the job you want, and I don’t mean wearing a C-suite suit.

Your look should appear vibrant and modern. You don’t want to look dated because it’ll make the interviewer think that your skills are dated too.

The goal is to look age-appropriate yet current. Invest in a new suit, a slimmer fitted dress shirt, or a new pair of shoes. If you wear glasses, prioritize getting those updated first. Nothing ages someone more than an out-of-date pair of eyeglasses.

Tip 4: Update your Email Address

If you’re still using an old AOL or Hotmail account, you need to sign up for a newer email service. Get a Gmail or Outlook account to show you’re keeping up with the times.

It probably won’t win you a job, but it definitely won’t raise any red flags during the screening process either.

Also, check out Zoho and iCloud Mail, these are newer email services that’ll show you’re a little more tech-forward.

Tip 5: Modernize Your Resume

First, be sure to keep your resume to two pages max. Even if you’ve had a long and successful career, don’t bother listing every job you’ve held.

A good rule-of-thumb is to go back 10 to 15 years in your work history. This will also help disguise your age a bit should you be unfairly categorized. You can leave off the year you graduated from school, as well.

Be sure to include your LinkedIn profile URL and newly updated email address. If you have a landline, it’s best to leave it off and just use your cellphone.

These are minor details that will show a hiring manager you’re up to date.

Tip 6: Use Experience to Your Advantage

A major advantage you probably have over younger applicants is your experience, make sure you point that out and show how your expertise will help the company.

Don’t just tout your past though. Talk about the future and how you can mentor and groom the next generation of leaders in the company.

Tip 7: Show Adaptability

There’s a notion that older workers are typically going to be set in their ways. This is a common hurdle the over-50 job seeker must face. To fight this stereotype, you need to show that you’re adaptable to change.

When you speak to hiring managers, talk about situations where you adapted to change and the positive outcomes from doing so. Another way to show your flexibility is your willingness to take on temporary, part-time, or project-based work.

Employers understand that young job seekers want full-time jobs with benefits and security for their families. Older workers can fill the void especially for jobs that are seasonal or temporary by nature.

Tip 8: Keep up on Trends in Your Field

An easy way to impress hiring managers is to show that you’ve been keeping up in your field. To do this you can simply read industry newsletters, books, or watch videos online.

There are plenty of online courses you can take for further career development. Udemy, Lynda, and Coursera are all good places to start looking.

Tip 9: Highlight Your Tech Skills

You can’t get around it. In today’s workplace, you need to have a solid understanding of the technology used in your field. Find ways to weave the tech skills you have and are learning into the recruitment process.

For instance: instead of just saying you’re proficient in Excel, give a quick example of how you used Excel to filter large sets of data using pivot tables.

Tip 10: Show You’re High Energy

You want to give the impression that you’re ready to hit the ground running and not simply winding down for retirement. Terms like energetic, fast-paced, and looking for a new challenge are easy ways to liven up your resume.

No doubt, finding work as you get older becomes more challenging.

But that certainly doesn’t mean that you have less to offer than younger candidates. You just have to exert a little more effort to show that in your resume and during the interview process.
Stick to the basics and follow these 10 tips, it’ll help improve your odds of landing a job, or two.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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Over 50? The Important Investment you NEED to Make…

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What do you call an investment that has no risk, requires little — if any — money to start, is available equally to the rich and poor, is proven to improve your career prospects…  can generate hundreds of thousands of dollars in savings over a lifetime?

I call it good health.

Although you might view spending on your health as a necessary expense, I’d argue it’s an investment that will pay back dividends.

Health is one of the least talked about financial topics but arguably the most important. 

Without good health, it doesn’t matter how much money you have in the bank because you won’t ever be able to enjoy it if you’re always sick.

According to The Wall Street Journal, the average individual will rack up $220,000 worth of health expenses in retirement.

It should come as no surprise, but getting old is not cheap.

There are, however, proven things you can do today that will help decrease your health costs tomorrow.

For instance, one study from the Johns Hopkins Bloomberg School of Public Health found that weight loss at any age leads to cost savings. The study found it costs people more when they’re overweight – especially as they age.

According to the study:

  • A 20-year-old adult who goes from obese to overweight would save an average of $17,655 in direct medical costs and productivity losses over their lifetime. If that person went from obese to a healthy weight, the savings would jump to $28,020.
  • If a 40-year-old adult goes from being obese to overweight, that person potentially can save an average of $18,262. If that person improves their health from obese to a healthy weight, an average savings of $31,447 in direct medical costs and productivity losses can follow.

Cost savings peak at age 50, according to the study. At 50, you save an average of $36,278. The study concluded by saying that at nearly any age there can be a cost savings if you improve your weight.

Aside from losing weight, what other aspects of your health can be improved to help your bank account?

I’ve identified three key areas you should focus on. Here they are…

#1 Start Eating Healthy

Harvard estimates it costs an extra $1.50 to eat healthy per day.

That’s an extra $550 per year.

The benefits of eating healthy are: reduced inflammation, a strong immune system to help fight off diseases and infection, lower Body Mass Index (BMI), which drastically reduces risks for Type 2 diabetes, heart disease, and fatty liver disease.

Actually, Type 2 diabetes is one of the most preventable diseases.

Type 1 is genetic and you’re typically diagnosed as a child or teenager. But Type 2 diabetes is heavily influenced by your lifestyle.

An estimated 30.3 million Americans have Type 2 diabetes. And it’s estimated that you spend 2.3x more on health care than someone without diabetes.

According to the CDC, the average cost of medical expenses for people with diagnosed diabetes is about $13,700 per year.

Let’s imagine you live with Type 2 diabetes for 30 years. From age 40 to age 70.

Without inflation, that’s $411,000 just to take care of your diabetes. And that doesn’t account for other health issues that will inevitably arise due to the stress placed on your body.

Now contrast that to spending an extra $1.50 per day on food and it’s a no brainer.

Eating healthy doesn’t have to be complicated either. There are plenty of proven healthy diets that work like the Mediterranean Diet and the Blue Zone Diet.

#2 Exercise More

Consider going on a “car diet.”

Look for opportunities to drive less. Walk, bike, take city transit. These will all save you money while incorporating some exercise.

Getting in quality exercise should not cost you very much. Forget about buying expensive running shoes, home exercise equipment, or boutique gym memberships.

The biggest investment will be your time. But even that shouldn’t cost you a lot. The CDC recommends 30 minutes of moderate activity, 5 days a week, for adults. The American Heart Association and the World Health Organization agree.

Where can you find 30 minutes in your day?

Go for a morning walk before you start your day. Walk at lunch to clear your head. The outdoors are free. Take advantage.

By eating healthy and exercising more, you’re investing in your long-term health. But another benefit to exercise and a healthy diet is it decreases the frequency you will get sick.

By not getting sick as often, you don’t have to miss work, using up sick days or unpaid days if you’re out. You’ll have more energy to take care of your grandkids, and you lower your medical bills like prescriptions and over-the-counter drugs.

#3 Eliminate Your Vices

This should go without saying but I’ll repeat it. You must eliminate any unhealthy habits that are costing you health and money.

An obvious culprit is cigarettes.

If you smoke, you’re literally burning money and years off your life. According to the CDC, the average cost of a pack of cigarettes is $6.28, which means a pack-a-day habit sets you back $188 per month or $2,292 per year. Ten years of smoking comes with a $22,920 price tag.

Another prime target are sugary drinks like Coca-Cola and calorie-loaded Starbucks drinks. Not only is it cheaper to drink water or regular coffee, you’ll be less likely to develop diabetes and other health-related issues.

By no means is quitting smoking or sugary beverages easy. But you need to try different approaches and figure out what works because you can’t keep hurting this up.

Your health should be part of your investment portfolio if it’s already not. It doesn’t matter if you’re conservative, modest, or you’re aggressive in your approach, what matters is you prioritize your health so you can live a truly wealthy life.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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What Does Freedom Mean for You?

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Two hundred and forty-three years ago, our Founding Fathers signed the Declaration of Independence, freeing our great nation from the rule of the British Empire.

On July 4th, we acknowledge their courage with celebrations all across the country. 

While you probably associate the fourth now with fireworks, cookouts, and summer mattress sales, I’m willing to bet you still hold freedom as one of your highest values.

But if you’re deeply in debt — or on shaky financial ground — fiscal freedom might seem like another 243 years away.

First, what does monetary independence mean to you?

For some people it’s a retirement number. Maybe $1 million in a 401(k), with your house paid off and expenses less than $1,000 a month. That person is probably more financially free than someone with $3 million in the bank and over $10,000 in monthly expenses. It all depends on your specific circumstances.

To me, monetary freedom is simply not having to base my decisions on financial constraints. You can achieve freedom with more money or less spending. It doesn’t really matter how you get there.

In the spirit of the holiday, I want to share with you four fiscal freedom principles. These should guide you throughout the rest of the year toward your own monetary independence.

Principle #1: Confront Your Spending

American households owe more than $1 trillion in credit card debt, according to the Federal Reserve.

Chalk it up to a lack of discipline to save or a meager salary that’s not enough, so you turn to borrowing to make ends meet.

No matter how you got there, it’s time to add up your debt and confront it — you’re not going to get ahead if you stay in denial.

And just like our forefathers had the courage to imagine a nation of liberty long before it materialized, you need to believe you can get yourself out of debt and stay out.

Starting this July 4th, commit to paying down your debt with a portion of every dollar that comes into your bank account.

Principle #2: Understand Your Investments

Just over half of Americans — 54% — invest in stocks, according to Gallup. While that number may sound decent, it still means there are millions of Americans missing out on their best chance at building real wealth.

Historically, the stock market has been the best place to build wealth over time. But you need to have some basic understanding of how investing works before you start.

As it stands, a lot of investors barely know what they’re invested in. For instance, among investors who own target date funds, the SEC found that only 48% knew that target date funds don’t provide guaranteed income after retirement.

Make sure you know what you’re getting into before you do it. But the bottom line is invest.

Principle #3: Improve Your Credit Score

Your credit score affects so many different areas in your life that you need to figure out how to improve your score.

If you have lousy credit, it impacts the rate you get on car loans, property, and all sorts of large purchases you make. The better your score, the lower your payments will be, and in turn the more money you can save.

Another reason you desperately want to start improving your credit score is because every inflated payment you make means those dollars can’t be invested elsewhere. Payments on large purchases typically last for many years. So, a bad credit score today will impact your lifetime savings dramatically.

Improving your credit score should be at the top of your list after this weekend.

Principle #4: Don’t Give Up

One of our Founding Fathers, Benjamin Franklin, famously said: “A penny saved is a penny earned.” America had to struggle hard for its own independence, but the payoff has been more than 200 years of freedom and prosperity.

If you truly want to achieve fiscal independence one day, it’s going to take some grit and self-discipline. You’re going to have to sacrifice short term pleasure for long term gain. But once you eliminate your debt, and continue saving and investing, you’ll eventually reach your monetary freedom day.

There are no magic shortcuts to wealth accumulation. If you apply the basics found in these four principles, you’ll be celebrating the rest of your life.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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Riding the Wave for Financial Success

This post Riding the Wave for Financial Success appeared first on Daily Reckoning.

In a column last week, I mentioned that my daughter was participating in the USA Surfing Championships. Well, I’m happy to say that she made the final for her age group and got invited to join the USA junior Olympic development team as well.

Of course, not everything went perfectly.

During the early part of her final heat, a massive set of waves came through and detonated on her and another competitor. My daughter had to duck under wave after wave, losing a lot of time and a lot of energy in the process.

Good thing she was wearing a leash – a rubber cord that connects a rider’s ankle to a surfboard.

In the earlier days of surfing, there was no such thing. Your board just rolled and tumbled to shore, often getting crushed on a reef or rocks along the way.

Of course, plenty of old timers – and some younger traditionalists – continue to surf without leashes.

There are some functional advantages, especially if you enjoy moving up and down your board a lot. And there are also some philosophical reasons as well.

In fact, you may hear some people grumbling that “the leash is what ruined surfing” or simply referring to such devices as “kook cords.”

The idea is that back in the day, before leashes, you had to be a competent swimmer and very aware of your own abilities out in the water.

As someone who occasionally surfs smaller waves (and longer boards) without a leash, I can tell you there is some merit to the argument. And yes, there is an investing point to this story…

False Sense of Security

Your whole mentality shifts when you aren’t wearing a leash.

For starters, you aren’t simply going for every wave in sight because there will be consequences to blowing a takeoff, falling, or having something else go wrong.

You are also a lot more careful about how you jump off your board and where you point it. The last thing you want is a new ding or to accidentally hit another surfer.

And when a number of surfers are all swimming after their boards, the entire lineup changes and opens up a bit more. You might say the better surfers get more waves while the less adept spend more time swimming away from where the waves are actually breaking.

In short: Leashes are like surfing’s great equalizer, but they can also breed a false sense of security.

Is anyone really safer wearing a leash?

I’m not sure.

Boards can still travel five or ten feet in any direction, which is plenty of room to hit someone or something else.

Rank beginners feel far more empowered to put themselves into situations they probably can’t swim out of.

People can paddle into more waves, which amplifies overcrowding.

And if anything, all these surfers are worrying far less about where their boards may end up going.

Today’s Financial Markets

I’m telling you all this because today’s financial markets feel much the same way – most investors and financial institutions are basking in a safety net created by easy money and yet serious dangers are still out there. 

Think about it …

When dotcom stocks crashed, the Federal Reserve came swooping in with low interest rates to help smooth over those (much deserved) losses.

When real estate speculators got wiped out in the subsequent bubble, here came the Fed yet again, pushing rates even lower.

The ensuing financial crisis? Same thing. Bailouts for banks and reckless institutions.

Now we’re hearing the Fed talk about the possibility of lowering rates once again.

Of course, the risk of drowning is still out there.

Just ask anyone who’s ever had a leash snap in sizable surf.

Suddenly that floating life preserver is no longer connected to you and the shore looks a lot farther away than it did two minutes earlier!

We may be approaching that day when the leash is simply stretched too far. When everyone has been lulled into a sense of complacency. And when the lifeguards are powerless to do anything more.

Knowing “How to Swim” in Our Financial World

So enjoy the waves. But make sure you know how to swim!

As I’ve explained many times, dividend stocks inherently carry some downside protection during tough markets.

In addition, you should also have other tools at the ready.

Meanwhile, you should also take stop loss orders, which tell your broker to sell your shares should they reach a predetermined price level.

Now, I do NOT recommend stops for your long-term, income-generating investments, provided you believe the company is strong and the dividend is reasonably secure.

That’s because if you’re constantly getting stopped out of positions, you will lose the current income, which is the real benefit of buying and holding dividend stocks.

However, choppy markets call for defensive measures when it comes to your shorter-term positions, especially if capital appreciation is the main goal.

You can also employ stops in your profitable positions as a way to lock-in gains in the event of a market decline. Simply raise your stop loss as the profits pile up.

Another thing to consider: Inverse ETFs, which hold a basket of investments are designed to go up when markets are heading down.

Example: An inverse ETF focused on Dow stocks should go UP when the Dow goes DOWN by roughly the same amount.

There are also double and triple inverse ETFs. They can be expected to go up two to three times as much as the Dow or another index goes down.

If you’re an income investor holding dividend stocks, inverse ETFs can help you hedge your portfolio against an imminent market drop without having to lose ownership or miss out on any dividend payments.

That’s not to say there aren’t some disadvantages with inverse ETFs:

First, you must allocate some of your investment dollars to the inverse ETFs, thus giving up some income for the protection.

Second, if the market rises substantially, your inverse positions will lose money (or at least offset the gains in your “long” positions).

Third, because of the way they’re constructed, inverse ETFs can drift away from their benchmark over time. And this is especially true of the double and triple leveraged versions.

In other words, if you hold them in your account for a long time, you may find that they gradually move away from the “mirrored” performance you expected.

But for short-term purposes, they are still a valid option. In fact, they can work really well with proper timing.

I know from experience. I recommended a double inverse Dow ETF — the UltraShort Dow30 ProShares ETF (DXD) — to my readers back in August 2008. And on September 30, 2008 … I recommended doubling their stake in the DXD for additional downside protection.

What happened next? The Dow plunged about 2,400 points!

When I recommended closing out the hedges at the end of 2008, I tracked gains of 65.4 percent and 43.7 percent, respectively.

That’s powerful protection, indeed!

And there are still additional, more advanced steps you can consider, too – including several strategies that involve options.

Plus, there are the original “investment leashes” – precious metals like gold and silver.

The bottom line? The seas might look really smooth so far this summer, but it never hurts to prepare for that rogue set somewhere out on the horizon.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post Riding the Wave for Financial Success appeared first on Daily Reckoning.

Have You Heard These 10 Must-Know Terms?

This post Have You Heard These 10 Must-Know Terms? appeared first on Daily Reckoning.

According to a recent Empower Retirement survey, 66% of respondents said they don’t understand what “rebalancing investments” means.

A similar percentage, 69%, said they don’t know what “asset allocation” means. And the survey found that millennials in particular find financial terms difficult to understand.

I’d say it’s not just the younger generations struggling to understand today’s financial jargon. I see a lot of soon-to-be retirees with the same distinct dear-in-the-headlights look when pressed about “diversification” and “decumulation.”

Planning for retirement should not be hard to understand. Which is why today I want to demystify a few common financial terms that seem to be tripping up a lot of people. You’ll see a lot of financial experts use these terms to sound smart – really they’re just annoying.

Here’s my top 10 list of financial jargon terms everyone you should know:

1. “Asset Allocation”

This is a term used to talk about how you divide your investment portfolio. How much are you allocating to stocks, bonds, cash, etc.?

Financial planners will often ask you how you want to allocate your assets, they’re essentially asking you how do you want to divide your money.

2. “Decumulation”

I know this sounds like a bad thing — it’s not.

It refers to a phase after years of growing (accumulating) your retirement account, where you begin drawing down your savings to fund your golden years. Essentially it’s a shift from saving to spending and there are lots of opinions and strategies on how to decumlate effectively.

3. “Deleverage”

This is a term that became popular after the financial crisis in 2008.

It simply refers to the concept of paying off debt. When you deleverage, you’re typically selling off assets to pay down your debt.

4. “Diversification”

This term is similar to asset allocation in that we’re talking about putting your money into different baskets. Diversifying your wealth is a strategy used to mitigate risk.

By distributing your wealth into different asset classes, you can lower the chance of losing all your money should one asset class tank.

For instance, if you invest all your money in real estate and house prices crash, you’ll lose your nest egg. Whereas if you invest only a portion into real estate, keep some cash, and invest the rest in stocks and bonds, now your money is diversified and better able to manage the good and bad times.

5. “Equities” and “Fixed Income”

These are really just stocks and bonds.

It annoys me when I hear people tell me their financial advisor has been using these terms instead of simply saying stocks and bonds. It creates unnecessary confusion all for trying to sound smart.

6. “Fee-only” and “Fee-based”

These are terms referring to a financial advisor’s fee structure. The difference is fee-only advisors are paid a flat fee, whether that’s hourly or a percentage of assets managed, and fee-based advisors can accept commission on financial products sold as well as whatever fee structure you negotiate.

This can create the potential for conflicts of interest, so it’s best to avoid fee-based planners.

7. “It Has a Great Story”

This familiar phrase simply refers to how well an investment has performed in the past.

It’s a ridiculous saying but you’re going to hear it a lot.

8. “Risk”

A lot of people associate this with losing money. Risk is really just the chance that your investment will not match your expected return (either positive or negative). If a mutual fund has a 6 percent historical return, and the actual return is 18 percent, that’s the good side of risk.

9. “Tax-Loss Harvesting”

This actually has nothing to do with farming or agriculture. It’s the selling of investments at a loss to lower your tax bill for the year. Most of the time, investors will buy a similar investment as a replacement at a lower price. But all this does is delay the tax penalty.

10. “The Market”

This is a term you probably think you know, but I’m going to challenge you to dig a little deeper next time you hear this term. The market is not singular.

Ask yourself or your financial advisor if you’re talking about the stock market or bond market? S&P 500? U.S. or international? You want the conversation to go deeper than just ‘the market.’ Because you’re not trying to meet or beat ‘the market,’ you’re trying to achieve specific financial goals.

My hope is that some of these definitions clear up the confusion around common financial jargon.

When in doubt, look up what terms mean and don’t be ashamed to ask the person using the jargon in front of you what the heck they’re actually talking about.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post Have You Heard These 10 Must-Know Terms? appeared first on Daily Reckoning.

America’s True Patriots

This post America’s True Patriots appeared first on Daily Reckoning.

Here is the trouble with America’s jingos, warhawks, drum-beaters, glory hounds and idealists:

They are not patriotic.

Come again, you say?

Do they not cry tears red, white and blue?

Do they not howl about American “greatness”… American “exceptionalism”… the shining city atop the hill?

That and more they do, yes.

Yet they are not patriotic.

That is the surprising case we haul before the jury today.

Yes, we are stepping away from our normal beat… and reflecting upon the virtue of patriotism.

This at a time when war shouts are rising against Iran, Venezuela, Russia — or whichever hellcat presently menaces the happiness of the United States.

(We first bow before the shade of late writer Joseph Sobran, upon whose insights we rely today.)

Country or Empire

Famed English writer G.K. Chesterton once denounced Rudyard Kipling’s “lack of patriotism.”

Lack of patriotism?

Kipling was chief rah-rah man for the British Empire, its loudest bugler.

English civilization overtopped all rival powers, he bellowed — as Everest overtops all rival peaks.

And as it should… Great Britain gave the law in all four corners of Earth.

From Kipling’s story Regulus, citing Virgil’s Aeneid:

“Roman! let this be your care, this your art; to rule over the nations and impose the ways
of peace…”

Substitute Britain for Rome and you have Kipling.

Why then did Chesterton deny his patriotism?

The reason is subtle. Yet vital.

“He Admires England, but He Does Not Love Her”

Chesterton argued that Kipling admired England because of her power. He did not love her for who she was:

He admires England, but he does not love her; for we admire things with reasons, but love them without reasons. He admires England because she is strong, not because she is English.

In contrast, Chesterton loved England as England — its customs, its eccentricities, its people — even its food.

A man loves his mother.

It is a wordless love, wide and deep.

He requires no reason. He need offer no explanation.

And as he loves his mother… so he loves his country.

His country is simply his country — be it China, Russia, Chile, Romania.

And so it is worthy of his love.


Of course Chesterton was right. You love your country as you love your mother — simply because it is yours, not because of its superiority to others, particularly superiority of power.

A Spacious Patriotism

Does the other fellow believe his own mother towers 900 feet over all others?

Well, friends, maybe he does.

But that in no way irritates, annoys or undoes the genuine patriot.

No harm flows from it. After all…

Adults allow children to cherish the fiction that reindeer fly and round men descend chimney chutes.

A man allows his wife to cherish the fiction that she is a superior cook and automobile driver… as she allows her husband to cherish the fiction that he is a skillful and formidable lover.

These are harmless fictions conducive to the domestic peace and happiness.

In that spirit, the patriot’s attitude toward foreigners is relaxed. It is accommodative. And spacious.

But a Kipling does not love his country as a man loves his mother.

His country must show all others its dust. It must outrace them all… else he feels diminished.

The Patriot Loves His Country Regardless

The United States of America stables many such fellows.

They are dizzied, wobbled, staggered by a higher American vision. Their eyes roll perpetually heavenward.

To these fellows, America must always be up to something big in this world.

She must be forever charging up San Juan Hill, going over the top, storming Normandy beach, bearing any burden, paying any price…

She must be beating the Russians to the moon, beating the world at basketball, beating democracy into somebody’s head.

Tall deeds, many of these. And sources of authentic pride.

But would the patriot love America any less if she fell short of the glory… if she left a gaping hole in the history books?

He would not.

It is — after all — his country.

And he loves it as he loves his mother.

But to the professional American, America must dazzle and strut upon the world’s stage.

She must be the “indispensable nation.”

If not indispensable… then dispensable.

If dispensable, then unworthy of his deep affections.

Hence his lack of patriotism.

The Difference Between the Patriot and the Nationalist

Sobran takes their measure:

Many Americans admire America for being strong, not for being American. For them America has to be “the greatest country on Earth” in order to be worthy of their devotion. If it were only the second greatest, or the 19th greatest, or, heaven forbid, “a third-rate power,” it would be virtually worthless… Maybe the poor Finns or Peruvians love their countries too, but heaven knows why — they have so little to be proud of, so few “reasons.”

And so Sobran peels away the patriot from his photographic negative — the nationalist ideologue:

The nationalist, who identifies America with abstractions like freedom and democracy, may think it’s precisely America’s mission to spread those abstractions around the world — to impose them by force, if necessary. In his mind, those abstractions are universal ideals… the world must be made “safe for democracy” by “a war to end all wars”… Any country that refuses to Americanize is “anti-American” — or a “rogue nation.” For the nationalist, war is a welcome opportunity to change the world.

We might list some offending names — but our legal counsel has just whispered into our ear.

But the patriot and the thunder-thumper babble the same American tongue. The one is therefore mistaken for the other.

Yet listen closer. They in fact speak alien languages:

Because the patriot and the nationalist often use the same words, they may not realize that they use those words in very different senses. The American patriot assumes that the nationalist loves this country with an affection like his own, failing to perceive that what the nationalist really loves is an abstraction — “national greatness,” or something like that. The American nationalist, on the other hand, is apt to be suspicious of the patriot, accusing him of insufficient zeal, or even “anti-Americanism.”

A Patriotism of the Heart

The patriotism Sobran hymns is a relaxed, healthful patriotism.

It is a patriotism of the heart.

This patriotism flies no ideological flags, hauls no metaphysical cargo, steers by no heavenly star.

It is the patriotism of the prairie, of the plain, of the lonely jackrabbit crossroad, of the greasy spoon, of the truckstop, of the front porch, of the pool hall… of Main Street.

And his fellow countrymen, the patriot takes them as he finds them.

Might they sometimes forget to wash behind the ears?

Sometimes they may. But it makes no nevermind.

They are his countrymen… and that is enough.

The patriot allows himself to laugh. Not at his fellow Americans — but with them.

The nationalist, meantime, does not laugh.

He scolds.

“Patriotism Is Relaxed. Nationalism Is Rigid.”

“Patriotism is relaxed,” as Sobran concludes. “Nationalism is rigid.”

We in turn conclude, paraphrasing Chesterton:

The relaxed patriot, the average American, the American who tends to his own business and sweeps his own stoop, the American who loves his country as he loves his mother — the fellow is all right.

But the rigid American, the 100% American, the thunder-thumping American, the American determined to put the world to rights — the American who admires America for her strength — but fails to love her as herself?

This fellow, he’s all wrong…


Brian Maher
Managing editor, The Daily Reckoning

The post America’s True Patriots appeared first on Daily Reckoning.

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